Bank of America National Trust and Savings Association v. Jacksons Ficom Limited and Others

Case No.HCA 6489/1985

Court

High Court CFI

Date—

Judge—

Case Document

100%Judiciary

HCA006489/1985

A1985, No. A6489

IN THE SUPREME COURT OF HONG KONG

HIGH COURT

___________

BETWEEN

	BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION	Plaintiff

	and

	JACKSONS FICOM LIMITED	1st Defendant
	J.G.ALIMCHANDANI (A male)	2nd Defendant
	MALA J. ALIMCHANDANI (A female)	3rd Defendant

__________________

Coram: Hon. Hooper, J. in Chambers

Dates of hearing: 6th - 7th, 17th - 18th, November 1986

Date of delivery of judgment: 12 DEC 1986

___________

JUDGMENT

___________

1. This is an application by the defendants for the final judgments entered against them to be set aside.

2. The writ had been issued on the 23rd of October 1985; judgment was entered against the 1st defendant on the 7th of November, 1985 and against the 2nd and 3rd defendants on the 14th of November 1985. On each occasion, judgment was entered because no notice of intention to defend was given by the defendant.

3. On the 20th of January, 1986 a praecipe for a writ of fieri facias was filed, and the writ was duly issued on 5th February 1986.

4. On the 11th of March 1986, an affidavit was filed by Mr Winston Chan informing the court that the execution proceedings would not realize sufficient funds to settle the judgment debt and asking for an order under 0.48 and 0.49(B) of the Rules of the Supreme Court that the 2nd and 3rd defendants do attend court to be examined as to their means to satisfy the judgment debts.

5. On the 19th of March 1986, an order was made for their examination pursuant to 0.49(B) to take place on the 22nd of April 1986. This order was formalised on 25th March 1986 and served on the defendants on the 26th of March 1986. On the 2nd of April 1986, the defendants sought advice from their solicitors and on the 22nd of April, applied for an adjournment. The hearing was adjourned to a date to be fixed and directions were given for production of certain documents and information.

6. Then on the 29th of April 1986, the present application was filed. The matter was set down before Master Jones on the 22nd of May 1986, but on that day it was adjourned for hearing before Mr Registrar O'Donnell on Friday, the 20th of June 1986.

7. On the 20th of June 1986, due to late filing by the plaintiff of an affidavit by Mr Wilson, a Vice President of the plaintiff bank, the matter was adjourned at the request of the defence counsel to a date to be fixed and various directions were given. It was estimated the time for hearing would be 2 days. Eventually, the matter was set down before me for hearing on the 6th and 7th of November.

8. Counsel for both parties argued their respective cases at considerable length and it was not possible for the hearing to be finished within the allocated 2 days. A further 2 days was therefore fixed for the hearing on the 17th and 18th of November.

9. It is clear that the applicants (defendants) intended to allow judgment to be entered against them at the commencement of these proceedings and to allow execution to proceed. It was only when the application was made for their examination under 0.49(B) that they decided to seek legal advice. That legal advice has resulted in this application.

10. The judgments entered against the defendants in this case were in respect of sums claimed to be due under an agreement dated the 22nd of May 1984 (the Nigerian Agreement) to which the plaintiff and all 3 defendants were parties.

11. The statement of claim had put the plaintiff's claim as follows:-

"4. By an agreement entered into between the Plaintiff and all three Defendants dated 22nd May 1984 (the "Agreement") in consideration of the Plaintiff inter alia forbearing from taking immediate action to recover amounts owing by the First Defendant to the Plaintiff (but entirely without prejudice to the right of the Plaintiff to take action for the recovery of such amounts at any time or from time after the date of the Agreement pursuant to the terms of the Agreement) the First Defendant acknowledged that it was indebted to the Plaintiff in the sum of U.S.$198,996.08 and HK$1,719,521.26 as at 1st May 1984 and the Plaintiff and the Defendants agreed to convert the U.S. $198,996.08 into a loan facility which was repayable on demand and the HK$1,719,521.26 into an overdraft facility, repayable on demand. The Plaintiff will refer to the Agreement for its full terms and effect at the trial of this action.

5. By Clause 3.02 of the Agreement it was agreed that interest should accrue on the loan facility at 2 1/2% above three months, Singapore Inter Bank Offered Rate ("SIBOR") or at such other rate as may be agreed between the parties thereto to be payable quarterly in arrears on the 5th January, 5th April, 5th July and 5th October in each year, the first payment to be made on 5th July 1984 in respect of the period 1st may to 4th July 1984.

6. By Clause 3.03 of the Agreement it was agreed that interest should accrue on the overdraft facility at the same rate and with the same rests as for the loan facility or otherwise at such rates and with such rests as are normally applied by the Plaintiff in respect of such overdraft accounts.

7. By a guarantee dated 16th June 1980 (the "Guarantee") the Second and Third Defendants guaranteed the repayment to the Plaintiff on demand of all sums of money which then or at any time thereafter were owing by the First Defendant to the Plaintiff. The Plaintiff will refer to the Guarantee for its full terms and effect at the trial of this action.

8. By virtue of Clause 7 of the Agreement in consideration of the Plaintiff refraining from taking immediate action to recover from the amounts owed by the First Defendant to the Plaintiff as set out in the Agreement and guaranteed by the Second and Third Defendants pursuant to the Guarantee, the Second and Third Defendant confirmed to the Plaintiff that the Guarantee remained in full force and effect notwithstanding the entering into of the Agreement.

9. The Plaintiff by three letters of demand dated 27th September 1985 sent to the First, Second and Third Defendants demanded repayment of the loan and overdraft facilities in the sum of U.S.$245,973.61 and HK$1,862,668.88 respectively together with interest accrued thereon within seven days of the date of demand.

10. Notwithstanding the said written demands by the Plaintiff to the three Defendants, all three Defendants have failed and or refused to pay all or any part of the amounts outstanding under the loan and overdraft facilities.

AND the Plaintiff claims against the 1st, 2nd and 3rd Defendants:

1. Under paragraph 9 above:

(a)	the said sum of U.S.$245,973.61 together with interest thereon from 27th September 1985 until payment at such rate as this Honourable Court shall think fit;
(b)	the said sum of HK$1,862,668.88 together with interest thereon from 27th September 1985 until payment at such rate as this Honourable Court shall think fit;

2. Costs.

3. Such further or other relief as this Honourable Court thinks fit. "

12. There can be no doubt and no one has suggested otherwise that the judgments entered were regular judgments and that the defendants had full knowledge of the entry of the judgments and in fact had made a conscious decision not to defend the action. It was only when a day was set for the examination of the 2nd and 3rd defendants that they sought legal advice.

The power to set aside

0.13, r.9 gives the court a discretionary power, on such terms as it thinks fit, to set aside or vary any judgment entered pursuant to this order.

According to the White Book, 1985 edition under Note 13/9/5

"If the judgment is regular, then it is an (almost) inflexible rule that there must be an affidavit of merits i.e. an affidavit stating facts showing a defence on the merits. "

Furthermore, Note 19/9/9 makes it quite clear that there is no rigid rule that the applicant must satisfy the court that there is a reasonable explanation why judgment was allowed to go by default though obviously the reasons, if any, for allowing judgment and then thereafter applying to set it aside is one of the matters to which the court will have regard in exercising its discretion Evans v. Bartlam⁽¹⁾.

13. This case was followed in Vann & another v. Awford & others⁽²⁾.

14. Counsel has been able to supply me with a transcript to this case before the court to appeal in England (Civil Division).

Dillon L.J. said:-

"It is, as is wellknown, the practice where an application is made to set aside a default judgment for the defendant who seeks to have the judgment set aside to given an explanation of his reasons for not defending the action and ignoring the proceedings ......... The law as to setting aside a default judgment has been authoritatively examined by the House of Lords in Evans v. Bartlam [1937] 473. In that case, Lord Atkin said at p. 480:-

If there were a rigid rule that no one could have a default judgment set aside who knew at the time and intended that there should be judgment signed, the ........ the rules would be deprived of most of their efficacy. The principle obviously is that unless and until the Court has pronounced a judgment upon the merits or by consent, it is to have the power to revoke the expression of its coercive power where that has only been obtained by a failure to follow any of the rules of procedure. '

Lord Wright said at p. 489:-

In a case like the present there is a judgment, which, though by default, is a regular judgment, and the applicant must show grounds why the discretion to set it aside should be exercised in his favour. The primary consideration is whether he has merits to which the Court should pay heed; if merits are shown the Court will not prima facie desire to let a judgment pass on which there has been no proper adjudication. '

These principles were recently applied by this court in the case of Ladup Ltd. v. Siu (unreported) decided on 21st November 1983. We have the advantage in this court, which the learned judge in the court below did not have, of having been able to look at the transcripts of the judgment in this case from the Supreme Court Library. It was a case in which the defendant had given an explanation of his delay in applying to have the default judgment to set aside which did not find favour with the courts. Lord Justice May said at p. 10 of his judgment:-

Although in these cases where an application is made to set aside a judgment obtained by default it is frequently said that not merely must a defence on the merits be shown, but also a reasonable explanation for the delay and default. I think that the passages to which I have referred from the speeches in Evans v. Bartlam make it quite clear that it is the first, the defence on the merits, which is of the prime importance at least in the case of an interlocutory judgment, and that the question of delay is a matter which falls to be dealt with only secondarily. '

Lord Justice Dunn, concurring, said this at page 12:

'	In applications to set aside a judgment I entirely agree with my Lord that the primary consideration is whether there is a defence on the merits, and the judge should have considered that first before considering the question of delay. ' "

15. In an even more recent case Alpine Bulk Transport Company Incorporated v. Saudi Eagle Shipping Co. Ltd. (unreported) according to the transcript, Sir Roger Ormrod reading the judgment of the court on 1st July 1986, and referring to Evans v. Bartlam⁽¹⁾ had this to say:-

"The following 'general indications to help the court in exercising the discretion' (per Lord Wright at p.488) can be extracted from the speeches in Evans v. Bartlam [1937] A.C. 473, bearing in mind that 'in matters of discretion, no one case can be authority for another'. (ibid page 488):

(i)	a judgment signed in default is a regular judgment from which, subject to below, the plaintiff derives rights of property;
(ii)	the Rules of Court give to the judge a discretionary power to set aside the default judgment which is in terms "unconditional" and the court should not "lay down rigid rules which deprive it of jurisdiction (per Lord Atkin at page 486);
(iii)	the purpose of this discretionary power is to avoid the injustice which might be caused if judgment followed automatically on default;

(iv)

the primary consideration is whether the defendant "has merits to which the Court should pay heed" (per Lord Wright at page 489), not as a rule of law but as a matter of common sense, since there is no point in setting aside a judgment if the defendant has no defence and if he has shown "merits" the "Court will not, prima facie, desire to let a judgment pass on which there has been no proper adjudication" (ibid page 489 and per Lord Russell of Killowen at page 482);

(v)

again as a matter of common sense, though not making it a condition precedent, the court will take into account the explanation as to how it came about that the defendant "found himself bound by a judgment regularly obtained to which he could have set up some serious defence" (per Lord Russell of Killowen at page 482).

In applying these "general indications" it is important in our judgment to be clear what the "primary consideration" really means. In the course of his argument Mr Clarke, Q.C. used the phrase "an arguable case" and it, or an equivalent occurs in some of the reported cases (e.g. Burns v. Kendal [1977] 1 Lloyds Rep. 554 and Vann v. Awford (unreported)). This phrase is commonly used in relation to Order 14 to indicate the standard to be met by a defendant who is seeking leave to defend. If it is used in the same sense in relation to setting aside a default judgment, it does not accord, in our judgment, with the standard indicated by each of their Lordships in Evans v. Bartlam [1937] AC 473. All of them clearly contemplated that a defendant who is asking the court to exercise its discretion in his favour should show that he has a defence which has a real prospect of success. (In Evans v. Bartlam there was an obvious defence under the Gaming Act and in Vann v. Awford a reasonable prospect of reducing the quantum of the claim). Indeed it would be surprising if the standard required for obtaining leave to defend (which has only to displace the plaintiff's assertion that there is no defence) were the same as that required to displace a regular judgment of the court and with it the rights acquired by the plaintiff. In our opinion, therefore, to arrive at a reasoned assessment of the justice of the case the court must form a provisional view of the probable outcome if the judgment were to be set aside and the defence developed. The "arguable" defence must carry some degree of conviction. "

16. It is therefore clear that I should first form a provisional view of the probable outcome of the case if judgment were to be set aside and the defence developed. Should I reach the view that the Defendants have not raised an arguable defence which carries some degree of conviction I should dismiss the application. Should I reach the view that the Defendants have raised such an arguable defence I should then consider as a matter of common sense whether the Defendants should be allowed to defend bearing in mind their conduct in letting judgment go by default, but having regard to the normal reluctance of the court to let judgment pass on which there has been no proper adjudication.

The merits of the defence

17. I therefore have to consider first the merits of the defence. These are put forward in two affirmations by Mr J.G. Alimchandani, the 2nd defendant, both on behalf of himself and the other 2 defendants.

18. The first of these affirmations contained a lengthy historical account of the events leading up to the signing of the Nigerian Agreement. The earlier passages indicate that he is a businessman of considerable commercial experience. Having retired and become bored with retirement, he incorporated the 1st defendant company on the 29th of April 1980. In June 1980, he applied for facilities from the plaintiff bank. These were duly granted and he was required to sign a personal guarantee. He began to use the facilities, but a few months afterwards there were problems in Nigeria where customers delayed payment. Despite knowledge of this, the plaintiff increased his facilities. By the end of 1982, the facilities had been utilized only to the extent of US$650,000.

19. The way in which they were utilized is set out in para. 18 of his first affirmation as follows:-

"	a.	I would ship goods from Hong Kong or other ports to my purchasers. I had purchasers in Nigeria, Spain, Chile and other countries. Most of my purchasers were in Nigeria.
	b.	Upon the goods being shipped I would draw a bill of exchange on the purchaser and hand over all the title documents and the bill of exchange to my bank, in this instance the Plaintiff.
	c.	The Plaintiff would send the documents to its collecting bank (or, to use another term, correspondent bank) in the purchaser's country. The collecting Bank would release the title documents to the purchaser on the purchaser accepting for payment the bill of exchange drawn by me.
	d.	The purchaser would accept the bill for payment, collect the title documents and have the goods released to him. Usually the purchaser would pay the bill on the due date to the Plaintiff's collecting bank. If there was a delay in payment the purchaser would be required to pay the Plaintiff interest up to the date of payment. Usually, the payment would be made in Nigerian currency (which for consistency of usage I shall refer to as 'local currency').
	e.	Upon receipt of the local currency the collecting bank of the Plaintiff would remit the money in accordance with instructions received from the Plaintiff. Once the money had been paid by the purchaser, neither I nor the purchaser had any right or power to deal with that money. It is from then on in the sole power of the Plaintiff, whose money it was. "

20. Mr Alimchandani then set out his contention as to the effect of this practice in sub-paras. (f) and (g) as follows:-

"	f.	I now wish to refer back to the stage of paragraph (b) hereof when I draw the bill of exchange. At that stage I would utilise my facility for the purpose of discounting the value of the bill. All bills are discounted by the Plaintiff (as indeed by all banks in Hong Kong) with recourse, which means that in the event of non-acceptance or non-payment of the bill by the purchaser the bank would be entitled to claim and recover the unpaid sum from me.
	g.	Once a bill is paid in local currency my liability as the drawer of the bill ceases and the bill is retired by the Plaintiff. When payment is made in local currency, what happens in effect is that the collecting bank receives money in local currency equivalent to the U.S. Dollars value of the bill. Almost invariably bills drawn in Hong Kong are drawn in U.S. Dollars. "

21. Mr Alimchandani continued that in 1982, Nigeria started to face a foreign exchange crisis and the Central Bank of Nigeria prevented any person from remitting any money out of the country. It therefore looked for consultants and advice on international financing. Finally, the Central Bank of Nigeria came up with a scheme whereby it would process all documents of each and every trade debt and, if satisfied, as to the genuiness of the transaction, it would issue promissory notes to banks whose funds under bills were frozen, promising that the Central Bank of Nigeria would in due course pay them with interest.

22. Mr Alimchandani further deposed to the fact that the handling of the various proceedings with foreign banks was handed over to the Chase Manhattan Bank in London. This bank wrote to all other banks and suppliers concerned to issue a formal certificate for the Central Bank of Nigeria to issue promissory notes.

23. In para. 24 of his first affirmation, Mr Alimchandani claims that the plaintiff was required to issue such certificates, signing and returning them before a certain date, but that it did not communicate this development to its customers in good time but instead waited till only a few days before the certificates were to be signed and returned to London. At that stage the bank informed it's customers that unless the customer signed an agreement, the plaintiff would refuse to sign the certificates to be sent back to London.

24. Therefore, says Mr Alimchandani, in ignorance of the law, the defendants were forced to sign the Nigerian Agreement upon which the claims in this action are based. He avers that they were not given opportunity to consult their legal advisers or to challenge or negotiate questions on the Agreement. That Agreement was signed on the 22nd of May 1984 but the bank remained silent for some time and then sent the correspondence before action on the 14th of October 1985. Mr Alimchandani deposed to the fact that the defendants were overborne by the plaintiff's insistence of its rights and were unaware of their own rights until the 2nd of April 1986 when they sought advice from their solicitors.

25. Mr Alimchandani exhibited to his affidavit a draft defence and counterclaim which he verified to be true, in which he set out a schedule showing the state of play as it were in respect of 12 bills of exchange. For ease of reference, that schedule is annexed to this judgment.

26. In para. 2 of the draft defence and counterclaim the defendants plead that the plaintiff discounted with recourse against the 1st plaintiff the bills of exchange drawn by the let defendant set out in this schedule.

27. Save with regard to the 4 bills (items 6, 7, 8 and 9 on the schedule), they claim that all the bills have been honoured and paid. They claim that the plaintiff's collecting bank has collected thereon. They deny that the plaintiff ever had any right of recovery against the let defendant in respect of these collected bills. The Nigerian Government has prevented the plaintiff's collecting bank from parting with the amounts collected. They plead the scheme referred to earlier in their defence. In para. 6 of their defence, the defendants plead that the plaintiff incorrectly insisted, in breach of its duty to the defendant and its customers, that in view of the said prevention, it had a right of recovery against the 1st defendant in respect of the collected bills even though such bills had been honoured and the plaintiff's collecting banks had collected thereunder. In para. 7, the defence alleges that the plaintiff would not, and told the defendants it would not, issue the said certificates unless they entered into the Nigerian Agreement upon which this action is based.

28. Finally, in para. 8 of the defence, the defendants allege that they entered into the Agreement

(i)	under a mistake as to their private rights;
(ii)	under duress in the circumstances pleaded in para. 7;
(iii)	without any consideration moving from the plaintiff to any of the defendants, since the plaintiff did not have the right of recovery which it insisted that it had.

29. The defence then claims that the Agreement is void, alternatively voidable and had been avoided by a letter dated the 26th of April 1986 from the defendants' solicitors to the plaintiff’s solicitors.

30. The defendants claim also that the plaintiff wrongfully appropriated certain of the defendants' funds in purported pursuance of the Nigerian Agreement proceeding on the erroneous footing that it had a right of recovery.

31. Mr Wilson, a Vice President of the plaintiff bank, has filed an affidavit in reply denying all these allegations. So far as the right of recovery is concerned, he refers to the general agreement for commercial business dated 16th of June 1980 which applies to the dealings between the plaintiff and the 1st defendant exhibited to Mr Alimchandani's affirmation.

32. In particular, he refers to clauses 1, 10, 12, 23, 24(1) and (2) which are now set out:-

"1. To repay to you on demand all moneys paid or to be paid or advances whether made by way of overdrafts or in any other form or hereafter to be made by you to me (us) or to any other person at my (our) request and I (we) hereby authorize you to charge at any time chosen by you any account of mine (ours) which I (we) can operate, including loan accounts which may be designated by any title you may deem fit with all moneys so paid or advanced or for which you are liable or may become liable as a consequence direct or indirect of any application made to you by me (us).

10.         That where you make any collection on any of my (our) documents or documents and drafts upon my (our) request, I (we) agree that if credit has been given by you for any such documents or documents and drafts, such credit is conditional and is subject to collection and receipt by you of full payment of such documents or documents and drafts and in the absence of such collection and receipt by you, I (we) agree, upon your demand, to reimburse you for the amount so advanced. I (we) further agree that in receiving any items for deposit or collection, you assume no responsibility beyond the exercise of due care. All items which are credited are so credited subject to actual payment in cash and you will not be liable in any way whatever for the default or negligence of your duly selected correspondents or for any losses in transit and each such correspondent shall not be liable except for its own negligence. You and any agent of yours may accept a draft or credit as conditional payment in lieu of cash settlement of any obligation but my (our) obligation to you will not be discharged until you have duly received payment on such draft or credit.

12.        You are hereby authorized to open on your books one or more accounts in my (our) name to be designated "Advance Account(s)", or such other designation as you may see fit to give such account or accounts, and to charge to such account or accounts all drafts drawn on you by me (us) and all advances of every kind and nature which you may make to me (us) or at my (our) request.

23.         That I (we) shall indemnify and hold you harmless from and against any and all consequences which may arise or result from giving credit to me (us) or performing any banking service for me (us) and shall reimburse you upon demand for any payment, loss and damage which you may make, suffer or sustain by reason or on account thereof and shall upon request appear and defend at my (our) own cost and expense any action which may be brought against you in connection therewith.

24(1)         That each of the rights, powers and remedies given to you by this agreement shall be in addition to all other rights, powers and remedies given to you hereunder or by virtue of any other security, status, or rule of law or equity. You may exercise a banker's lien or right of set-off with respect to any of my (our) obligations to you in the same manner as if the obligations were unsecured and shall have a lien on all of my (our) property or securities in your possession or custody whether for safekeeping or otherwise. All credit balances whether in Hongkong Dollars, Sterling or any other currency in all accounts in my (our) name may be appropriated by you towards payment of any liability to you of whatever kind and irrespective of when the same may be due or may be held by you as security for any contingent or future liability to you. Any forbearance or failure or delay by you in exercising any right, power or remedy, shall not be deemed to be a waiver of such right, power or remedy and any single or partial exercise of any right, power or remedy hereunder shall not preclude the further exercise thereof; and each of your rights, powers and remedies shall continue in full force and effect until such rights, powers or remedies are specifically waived by an instrument in writing executed by you.

24(2).         That provided you exercise the rights powers or remedies given to you hereunder or otherwise (which are referred to in sub-clause (1) above) in the bona fide belief that I (we) am (are) under a liability to you of any kind referred to in sub-clause (1) above, you shall be exempted from liability of any nature whatsoever in respect thereof in the event that such exercise is eventually considered by you or found or adjudged to be wrongful or unjustified. "

33. Mr Wilson claims in his affidavit that the plaintiff has received no payment in respect of any of the bills set out in the schedule annexed hereto.

34. It is, of course, conceded by the defence that the bills Nos. 6, 7, 8 and 9 on that schedule have not been paid.

35. Mr Wilson exhibits a voluminous bundle of documents relating to each of the other items, which confirms that payment was made in local currency to the collecting bank as appears on the schedule on the dates shown all of which were after due date.

36. However, he avers that the plaintiff has not been paid under any of the bills, notwithstanding there has been payment in local currency in Nigeria on these late dates.

37. He also deposes as to the plaintiff's accounting procedure and seeks to justify the appropriation of funds under the general agreement. Notwithstanding the plaintiff's internal accounting procedure, the bills in question remained collection items until payment would have been received, he says. He explains that the sum claimed in the statement of claim was in respect of 3 bills, namely items 10, 11 and 12 on the schedule, which remained standing to the credit of the trade bills account and interest on that account and which represented the sum of US$245,973,61. He claims that the bank is acting within the terms of the general agreement in charging interest in respect of all the bills on the schedule.

38. He attacks Mr Alimchandani's contention that payment in local currency to a bank in Nigeria constituted payment to the plaintiff. He exhibits an opinion from lawyers in Nigeria. That opinion is to the effect that under Nigerian law, a drawer or acceptor of a bill of exchange engages that the bill shall be paid in accordance with its tenor. Therefore, payment in local currency to the payee banks correspondent in Nigeria of a bill drawn in US dollars would not constitute payment or valid discharge.

39. So far as the Nigerian Agreement is concerned, Mr Wilson refutes all the allegations of the defendants that the plaintiffs coerced the defendants into signing the Nigerian Agreement. He sets out the precise sequence of events in para. 18 of his affidavit supported by documents. Accordingly, he says it is wholly untrue that the plaintiff "did not communicate the development to its customers in good time but instead waited till there were only a few days for the certificate to be signed and returned to London" as alleged in the defendant's affirmation. He points out the undisputed fact that the defendant had the Nigerian Agreement for a week before signing it and therefore had ample opportunity to seek legal advice if they wished to do so. The urgency was the result of the time limit set by the Nigerian Government and not by the plaintiff. He denies the defendants' will was overborne.

40. As the plaintiffs have received no payment under the scheme, he claims that it was entitled to debit the defendants' account and to obtain judgment in the sum awarded in repayment of the sums advanced.

41. A further affirmation was filed by the defendants again taking issue with Mr Wilson that the plaintiff has not received payment on the bills of exchange. And supporting this contention with an opinion from lawyers in Nigeria who based their opinion on the circumstances set out in a telex from the defendants' solicitors. However, Mr Alimchandani claimed that insofar as the plaintiff ever had any right to be paid in US currency under the bills which he denied, such right was waived and/or varied so as to be replaced by a right to what the plaintiffs actually got, namely payment in Nigerian currency. And he avered that the defendants will plead waiver and/or variation insofar as it may be necessary. He still maintains the defendants had not had sufficient time to take legal advice on the agreement.

42. I have had the advantage of hearing lengthy arguments by leading counsel on both sides in support of their respective contentions.

43. The main contention of the defendants upon which their defence is based is that payment has been made on bills, items 1 - 5 and 10, 11 and 12 shown in the schedule.

44. I cannot see that they have any prospect of success in substantiating this contention if judgment were to be set aside.

45. It seems clear from the unchallenged documentary evidence exhibited in the affidavit of Mr Wilson that the bills were discounted "subject to final payment". This means, of course, that until final payment is made the bills are merely collection items and the sums credited to the let defendant's account merely advances.

46. Such advances would therefore appear to be governed by the general agreement exhibited to Mr Alimchandani's affirmation and in particular, Clauses 1, 10, 12, 23 and 24 referred to by Mr Wilson.

47. The unchallenged documentary evidence in relation to the bills show that collection instructions in similar terms were given to the plaintiff by the 1st defendant in respect of every bill. .

48. Special instructions in each case were:-

"If required by exchange regulations, release against provisional payment in local currency and drawer's written undertaking to remain responsible for any exchange fluctuation. Surrender draft when remittance effected. "

49. There were also other special instructions to the effect that the bills should be presented through the Union Bank of Nigeria Ltd. Balogun Square Branch, Lagos, Nigeria.

50. There were instructions to remit funds by cable transfer.

51. All bills for collection were said to be subject to the "Uniform Rules For Collection (1978) Revision, International Chamber of Commerce, Publication No. 322. "

	Article 3 provides:-
"	For the purpose of giving effect to the instructions of the principal, the remitting bank will utilize as the collecting bank;

(i)	the collecting bank nominated by the principal, or, in the absence of such nomination,
(ii)	any bank, of its own or another bank's choice, in the country of payment or acceptance, as the case may be.

The documents and the collection order may be sent to the collecting bank directly or through another bank as intermediary.

Banks utilising the services of other banks for the purpose of giving effect to the instructions of the principal do so for the account of and at the risk of the latter. "

On the subject of "presentation", it also provides in Article 9:-

"In the case of documents payable at sight the presenting bank must make presentation for payment without delay. In the case of documents payable at a tenor other than sight the presenting bank must, where acceptance is called for, make presentation for acceptance without delay, and where payment is called for, making presentation for payment not later than the appropriate maturity date. "

52. A suggestion that any of the bills in this case were honoured on presentation stands little chance of success. Although payments were made in local currency on eight of the bills on the dates referred to in the final column of that schedule, I do not see how those payments could constitute final payment in accordance with the collection instructions.

	Article 12 provides:
"	In the case of documents payable in a currency other than that of the country of payment (foreign currency), the presenting bank must, unless otherwise instructed in the collection order, only release the documents to the drawee against payment in the relative foreign currency which can immediately be remitted in accordance with the instructions given in the collection order. "

53. As I have said, the instructions in this case were to remit funds by cable in the foreign currency (i.e. US dollars).

54. There is no evidence of any practice nor of any actual or ostensible authority given to the collecting banks in Nigeria after the introduction of exchange controls to receive and accept payment in Nigeria in Nigerian currency in discharge of the buyers' obligations to pay US dollars on the bills.

55. The opinion of the Nigerian lawyer exhibited to Mr Alimchandani's affirmation namely:-

"	From the facts available to us, once the collection banks have collected payment in Nigeria (and since was the practice in the past) the bills under our laws have been honoured. "
	Was based on facts submitted to them as follows:-
"	Our client, a Hong Kong exporter, drew bills of exchange, expressed in US dollars, on Nigerian importers, who accepted such bills. The bills were then discounted by a bank in Hong Kong. The discounting banks, collecting banks have collected payment in Nigeria in Nigerian currency. The discounting bank, although it has for years followed the practice of taking payment, through its agents, in Nigerian currency, now seeks to argue that the bills are not to be considered to have been honoured despite such collection of payment simply because payment was in Nigerian currency. Leading counsel has advised that under Hong Kong Law following English law, the bills were honoured when payment was effected and accepted in Nigerian currency. We expect that the same conclusion is to be arrived at under Nigerian Law, and we require the opinion of a Nigerian lawyer saying so. As the matter is urgent and we require an answer by 9th July 1986, a simple reference to this letter and a statement that in the circumstances set out therein, the bills are considered to have been honoured under the Nigerian Law will suffice.

In arriving at his view, leading counsel has looked at, inter alia, the decision of the Court of Appeal in England in W. J. Alan & Co. v. L. Nazareth Export [1972] 2 Q.B. 108. "

56. It is hardly surprising that on receipt of that telex, the Nigerian lawyers should have given the opinion which they did on those facts.

57. The facts, however, would appear to be contrary to the unchallenged documentary evidence in this case and the opinion does not therefore really assist the defendants at all.

58. The correspondence purports to show that the defendants were at all times fully informed that payment had been made in local currency and that exchange control permission to remit US dollars had not been obtained. As Mr Mills-Owens has pointed out, there was no suggestion at any time prior to this present application that the plaintiff had been paid. Indeed, the correspondence supports quite the opposite contention.

59. I think that the submission of Mr Mills-Owens that on the evidence in this case the plaintiff, not having been paid, still had its right of recourse against the let defendant and the remedies provided under the general agreement for commercial business is very much more attractive.

Mistake

60. That being so the whole basis for the defence based upon mistake goes out of the window.

Duress

61. It is suggested by the defendants that they signed the Nigerian Agreement under economic duress. I have been referred to the chapter on duress in Chitty on Contracts 25th edition, Vol. I and in particular, the passages appearing on this subject at pages 271 et seq. where a number of authorities are quoted.

62. Lord Scarman in Pao On v. Lau Yin Long⁽³⁾ at p. 635 is reported as saying:-

"It is material to inquire whether the person alleged to have been coerced did or did not protest; whether at the time he was allegedly coerced into making the contract, he did or did not have an alternative course open to him such as adequate legal remedy; whether he was independently advised; and whether after entering the contract he took steps to avoid it. "

63. Lord Scarman in Universe Tankships v. ITF⁽⁴⁾ suggested that duress is founded on (1) pressure amounting to compulsion of the will of the victim and (2) the illegitimacy of the pressure exerted.

64. Having considered these authorities carefully and the affidavits and exhibits in this case, I cannot see that the defendants would have any real prospects of success in establishing such a defence.

65. As Mr Mills-Ovens has pointed out, the plaintiff was not obliged to do anything for the 1st defendant in relation to the certificates, there being no contractual obligation to do so. There was no threat to do anything unlawful. The plaintiff was fully entitled to protect its own position. There was no allegation that the plaintiff acted . . in bad faith. The plaintiff communicated promptly with the defendants regarding the Nigerian scheme. The defendants had ample time to consider the scheme proposals and indeed submitted their documents by May 7th. The defendants had three weeks in which to obtain advice on the scheme and they had over a week to get legal advice on the draft agreement. The defendants took the benefit of the Nigerian scheme because the plaintiff pursuant to its terms did not sue. The defendants did not take any steps to avoid or challenge the agreement. Indeed, they abided by it up to and after judgment. They allowed judgment to be entered despite an assertion in their letter of 5th October 1985 that the agreement was signed under force.

66. In my view, having intentionally allowed judgment to be entered against them, it is now too late and a defence based on this ground would have little chance of success.

Consideration

67. Once the defendants' main contention that the plaintiff had no claim to repayment is rejected, it leaves little room for an argument based on lack of consideration. The Nigerian agreement itself purports to set out the consideration for the agreement. I do not consider such an argument to stand any chance of success.

68. The 1st defendant is an experienced businessman and he must have known What he was doing when he signed the Agreement and he must have intended to sign the agreement in those terms. The defendants agreed to the absolute nature of the obligations contained in para. 8.

69. I do not consider any of the proposed defences raised by the defendants stand any real prospect of success and that the application should therefore be dismissed for this reason.

70. However, even if it were thought that there would be some chance of establishing a defence, it is my view that in view of the conduct of the defendants in allowing judgment to be entered despite the fact that there had been a suggestion of duress before action and despite the fact that they had plenty of opportunity for legal advice at that stage and then bringing this application only after the execution by writ of fieri facias had failed to satisfy the defendants' obligations, My discretion would be against granting the application.

71. On a consideration of the merits however, I dismiss this application with costs.

(N.B. Hooper)

Judge of the High Court

(1) [1937] A.C. 473 at 480

(2) The Times 1986, 23rd April

(1) [1937] A.C. 473

(3) [1980] A.C. 614

(4) [1983] A.C. 400

Representation:

Mr. K. Bokhary, Q.C. and Mr. A. Ismail (Y.K. Poon & Co.) for the Defendants/Applicants

Mr. Mills-Owens, Q.C. and Air. R. J. Faulkner (Stephenson Harwood & Lo) for the Plaintiff/Respondent

SCHEDULE

	case of Purchase	TB No.	Collecting Banks	Drawn on:	Atount Discounted:	Due Date	Local Currency Paid
1	Jan 22,81	CTB280855	Union Bank of Nig. Ltd.	Chrishil Obi & Bros. Electronics Co: Ltd.	US$127,634.64*	May22,1981	Nov. 2, 1982
2	Oct. 1, 81	CTB285672	Chase Merchant Bank (Nig.) Ltd.	Normanco (Nig.) Ltd.	US$13,465.000	Feb. 1,1982	Nov.30,1982
3	Oct. 20,81	CTB285988	Chase Merchant Bank (Nig.) Ltd	Normanco (Nig.) Ltd.	US$ 23,698.40	Feb.21,1982	Sept 23,1982
4	Nov. 9,81	CTB286687	Chase Merchant Bank (Nig.) Ltd.	Normanco (Nig.) Ltd.	US$12,4225.00	Mar.27,1982	Nov.30,1982
5	Oct. 20,81	CTB285989	United Bank, for Africa Ltd.	Esenkay (Nig.) Ltd.	US$ 30,590.12	Feb.5,1982	Sept.2,1982
					____________ US$207 813 16 ============
6	Feb. 16,82	CTB288016	Banco del Estado de Chile	Importadora Y Exportadora Silver Ltda.	US$ 53,814.40	June11,1982	-
7	Jan. 19,81	CTB280838	First Bank of Nig. Ltd.	Chrishil Obi & Bros. Electronics Co. Ltd., Lagos	US$ 93,440.00	May22,1981	-
8	Feb. 22,82	CTB288093	Banco del Estado de Chile	Importadora Y Exportadora Silver Ltda.	US$ 36,200.00	July 19,1982	-
9	Aug. 18,82	CTB290570	Union Bank of Nig. Ltd.	Eastern Stores (Nig.) Ltd.	US$ 51,888.76	Feb.5,1983	-
					____________ US$235.343.16 ============
10	Aug. 11,82	TB290451	Union Bank of Nig. Ltd.	Eastern Steres (Nig.) Ltd.	US$ 52,785.34	Jan.27,1983	Mar. 21,1983
11	Aug. 13,82	TB290462	Union Bank of Nig. Ltd.	Eastern Stores (Hig.) Ltd.	US$ 52,759.68	Jan. 27,1983	Mar. 4,1983
12	Jan. 24,83	TB292629	Union Bank of Nig. Ltd.	Tinuoin Ent (Mig.) Ltd.	US$ 81,000.00	July 8,1983

* in respect of a bill for US$164,207.64